We have just purchased a bank. They have about 20 non-resident alien dda accounts. They do not have a passport number, social security number, or nra number. What should we get for CIP purposes? Would they have a passport number. I was told they may not have one. How do we get proper ID on these customers?

When were the accounts opened?

If it was before October 1, 2003 then the CIP regulation was not in effect. There was no legal requirement that the bank obtain the four pieces of information, including an identifying number. As they are demand deposit accounts, there was not even a need on the bank's part to obtain a W8-BEN. Label any effort you undertake as "due diligence" not CIP, but it probably would be prudent to clean this up.

If it was after the above date, review the bank's CIP and see how far out of compliance they were in opening these accounts. Regardless of what you find there, start contacting the account holders and give them a specific period of time (30 days?) to provide the information and documentation or the accounts will be closed. Document your efforts and finish the project in the timeframe you establish.

We frequently acquire banks with NRA customers and often find that the bank has failed to properly document ID for many of these individuals. We generally go back and ID all aliens to insure we know the true identity of each customer. I do not feel I could make a good case with a regulator that I know an alien customer's true identity if we didn't ask the right questions when we established the relationship. We generally find that most of the customers identified as NRAs are actually resident aliens.

We also generate a list of ITINs to insure that they are properly coded as aliens. Often we find they have been coded as U.S. persons because they have a TIN.

I think these are prudent CIP/CDD steps and serve well to educate bank employees on proper alien ID procedures.

How do you identify an ITIN from a SSN?

If you go to the www.ssa.gov website, there is good information there on SSNs.

ITIN is issued to an individual; it starts with a "9" and the 4th digit is a "7" or an "8".

There should be a either a W9 or a W8-BEN on file for any account holder. If you are missing certification information, then I would recommend you do a solicitation. For any accounts/customer records you do not receive the information on, you should be coding them for backup withholding even if the accounts are not currently interest bearing.

We add a note to the customer's record and each account stating that the customer is "subject to backup withholding pending receipt of TIN certification". That way the bankers see the notation on the customer record if they open any new accounts for the customer and they are reminded to be certain that The W9 or W8 are secured.

If you don't have the W8-BEN data, it is very difficult to properly do your 1042-S reporting.

TIN related certifications; i.e. W-9's and W8-BENs, are only required on interest bearing accounts. Banks that require them on all accounts reflect internal polcies, not legal requirments.

Baseballfan indicated these are demand deposits. Accordingly, they are not interest bearing and the forms are not required.

No, certifications are not required on 1098 reporting. Since the reporting benefits the taxpayer, the IRS assumes he or she will give the right information.

hey guys-- please check out my poll regarding NRA"s in the General Discussion thread.